Global recession gives Japan’s exports the chill
22 Dec 2008
Global recession has taken its toll on Japan's once booming exports, as the month of November showed its exports plunging a record 26.7 per cent due to the collapse in global demand for electronics and cars and economist warning of a further decline in the coming months.
Japan's ministry of finance said yesterday that a surging yen coupled with a drop in demand for consumer electronics and cars has seen the country's exports nosedive by a record 26.7 per cent in November, which has bought the economy in a worse situation for the first time in nearly seven years.
The compilation of statistics, first started in 1980 showed that, while imports fell by 14.4 per cent, exports went south by a staggering 26.7 per cent making the balance in trade show a deficit for the second time in a row.
The ministry revealed that exports totaled 5.3 trillion yen (£40 billion) while imports fell to 5.55 trillion yen (£41 billion), compared to last year resulting in a trade deficit of 223.4 billion yen (£1.6 billion).
The deficit, which was larger than a market average forecast of 208 billion yen, reversed a surplus of 784.4 billion yen a year earlier even as imports fell for the first time in 14 months.
Japan, traditionally always had a huge trade surplus, largely due to the global demand for its cars and consumer electronic goods, but with the current economic slowdown, demand has declined considerably with cars showing the steepest decline.
The finance ministry of the world's second largest economy after the US said, shipments of automobiles for the month of November, declined by 31.9 per cent, while microchips and other electronics components, fell 29.0 per cent.
With a fifteenth consecutive year-on-year fall, exports to the US, fell by a record 33.8 per cent in November, with vehicle exports plunging by 44 per cent, exports of car parts falling 40 per cent and audio equipment down by 48.2 per cent.
Exports to the European Union fell by 30.8 per cent, with vehicle exports falling by 37.2 per cent.
Asian markets, which was not affected earlier to the global slowdown, is now showing signs of steep decline with exports to Asia falling by 26.7 per cent last month and shipments to China, its biggest trading partner, dropping by 24.5 per cent, its biggest fall since 1995, due to decline in demand for semiconductors, digital cameras and other electronic goods.
With its exports tumbling, Bank of Japan had lowered its key interest rate to 0.1 per cent last week and the yen soaring to 13 year high, added to exporter's woes with the yen trading at approx 90 to a dollar today compared to more than 110 yen a year ago.
With Japan sliding into recession, the government today lowered its assessment saying that the economy is worse for the first time since 2002 as gross domestic product shrunk in the past six months.
Prime Minister Taro Aso, in a bid to boost consumer spending, made the finance ministry include a 2 trillion yen in cash handouts for household in the extra budget for the year ending March but experts opine that this will not help much as consumer confidence is very low as new job scenario is bleak and wages have stagnated.
